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  1. Home
  2. Technical Articles
  3. Price, selection of application-oriented solutions affects machine tool sales in India

Price, selection of application-oriented solutions affects machine tool sales in India

29 August, 2016
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By Niraj M Wanikar, Chief Editor, CNCTimes.com, 2016-08-29 16:31:00

By Bhalchandra Chorghade

Though manufacturing sector in India is small, compared to agriculture sector, the machine tool industry that falls under manufacturing sector, is very crucial. The industry supplies machine tools to cut, form and shape metals. Almost 50% of the manufacturing sector is dependent on this industry as companies manufacturing this state-of-the-art technology controls and supports the manufacturing activity of engineering products.

Industry Overview
According to Indian Machine Tool Manufacturers Association (IMTMA), India stands 13th in production and 10th in the consumption of machine tools in the world as per the 2016 Gardner Business Media survey. The country is set to become a key player in the global machine tools industry and is likely to see substantial high-end machine tool manufacturing. With emphasis on Make in India and manufacturing growth, for which the machine tools sector serves as the mother industry.

The Indian Machine tool Industry has around 1000 units in the production of machine tools, accessories/attachments, subsystems and parts. Of these, around 25 in the large scale sector account for about 70 percent of the turnover and the rest are in the MSME sector of the industry. Approximately, 75 percent of the Indian machine tool producers are ISO certified. While the large organized players cater to India’s heavy and medium industries, the small-scale sector meets the demand of ancillary and other units.

Challenges
Despite having such a strong figures and growth prospect, the industry is facing two major challenges. The first being technological advancements in the machine tool manufacturing world over is changing with each passing day. These changes along with evolution of automation and mechanization of small and medium scale production is causing problems to Indian machine tool manufacturers. This is forcing them to either look at global players in providing them the technology or entering into channel partnerships with these companies.

The second and the most important problem is the changing competitive situation within global market. This is resulting in severe adjustment problems with most of the Indian manufacturers and they are engaging into hectic brainstorming sessions to arrive at a solution to tackle the situation.
The Indian market is predominantly conservative and does not accept changes easily. Here, most of the users are worried about monetary part of machine tool and seldom pay attention to the application-based support.

Opinions and Suggestions
Elaborating the point further, Mr. Prashant Sardeshmukh, Director of Mitsubishi Hardmetal India (MMCI), says, “There is a price war that is going on in the market. Instead of understanding the applicability, most customers focus on price of the machine tool which puts us in a fix. We can’t maintain the prices which customers seek and in the process, losing the customer is imminent.”

Echoing similar feelings, Mr. B.P. Poddar, Vice President (Sales & Marketing), FEMCO Fatty Tuna India Pvt. Ltd, says, “Typical challenges faced while interacting with customers always evolve around pricing policy. The challenge is how to offer the best technology at low prices. Most of the times, there are unrealistic demands of meeting upfront capital investment costs. Sometimes, it is frustrating to offer solutions at low budget or costs and only tangible benefits are apparent while intangible benefits are completely ignored. To compete with global suppliers, technology needs to be upgraded quickly and then complete manufacturing processes needs to be optimised. Investing in outdated technology and competing with global suppliers will not be a healthy proposition.”

“Many times, we as machine tool suppliers, get frustrated with market demands on low cost solutions and wonder whether price comparison is influencing buying decisions. Certain machine tool categories such as CNC Lathe and 3 Axes machining centres have become commodities. Once technology reaches a particular level, the downfall starts and that causes only price war. To overcome these difficulties, many companies, particularly small and mid-size ones offer some value addition to product wherein customer gets some more benefits over extended time. This encompasses application engineering support, extended warranty etc. but users have started considering these value-added support as a norm and negotiate on these grounds. This creates a vicious circle,” Mr. Poddar explained.

Mr. Ashish Potdar, Founder of Mumbai-based Solid Vision, says, “Purchasing machine tools without understanding the application of the machine tool perfectly is the major challenge faced by us in the market. Since we move mostly in Mumbai market which is scattered and unorganized, explaining the application of a machine tool and providing service becomes more challenging.”

Countering The Problem
“However, we overcome this problem by constantly talking to the customer and making him understand the importance of purchasing the machine which can be best suitable for his type of job. Once he understands it, then selling becomes a bit easier,” Mr. Ashish Potdar added.
When asked about current market situation, Mr. Ashish Potdar said the market is good and growing in multiples. “There are some negative trends as regards finances, but still procurement is good. This helps the market in emanating positive vibes,” he said.

Mr. B. P. Poddar opines, “Though almost all market segments are showing positivity, if one looks at automobile segment, it appears that to retain market share, companies have to bring in new products in short time. It has become disruptive market like consumer electronics. However, some segments are positive and investments are taking place. Aerospace, Heavy Engineering, Defence and Infrastructure are promising sectors offering enormous opportunities.

“Though die and mold industry is doing well and there are pretty good opportunities in this segment, the sector has challenges as to how to reach precision quality demands and short delivery requirements. To succeed, industry must embrace design and manufacturing capabilities besides timely deliveries. As far as reactions in the market are concerned, they are positive. In my view, this is more of a psychological wave rather than reality. It will surely take some time to really come back to realistic market,” he added.

Grey Issue
Throwing light on another important aspect that is affecting machine tool sales in India, Mr. Sardeshmukh said, “Emergence of grey market is a big headache in this industry. Duplicating the original products and selling it at cheaper rate is something which is affecting our sales directly. We do negotiate with our customers as far as pricing is concerned but we don’t compromise on quality of our product. It is not that customers are not educated and don’t understand the difference between right and wrong, but they don’t understand that they are compromising on quality of their product by selecting a machine tool which is inferior.”

 

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